Bridges v. MacLean-Stevens Studios, Inc.

• Decision Date: 17 December 1998
• Docket Number: No. Civ. 98-71-B.,Civ. 98-71-B.
• Parties: Sally BRIDGES, et al., Plaintiffs, v. MacLEAN-STEVENS STUDIOS, INC., et al., Defendants.
• Court: U.S. District Court — District of Maine

35 F.Supp.2d 20

Sally BRIDGES, et al., Plaintiffs, v. MacLEAN-STEVENS STUDIOS, INC., et al., Defendants.

No. Civ. 98-71-B.

United States District Court, D. Maine.

December 17, 1998.

Jon Holder, Holder & Grover, Portland, ME, for plaintiffs.

John Hubbard Rich, III, Perkins, Thompson, Hinckley & Keddy, Portland, ME, for defendants.

ORDER AND MEMORANDUM OF DECISION

BRODY, District Judge.

Plaintiffs, parents of school-age children, bring this antitrust action against Defendants MacLean-Stevens Studios, Inc., a photography studio which services the school portrait market, and its owners, Lawrence and Blair MacLean. Plaintiffs allege that Defendants engaged in commercial bribery in violation of 15 U.S.C. § 13(c) (1994) (Count I), price discrimination in violation of 15 U.S.C. § 13(a) (1994) (Count II), and a conspiracy to restrain trade in violation of 15 U.S.C. § 1 (1994) (Count III).¹ Plaintiffs seek treble damages pursuant to 15 U.S.C. § 15(a) (1994) and an order enjoining Defendants from continuing their pricing practices. Before the Court are Plaintiffs' Motion for Class Certification, Defendants' Motion for Summary Judgment on all Counts of Plaintiffs' Complaint, and Plaintiffs' Cross Motion for Summary Judgment on Count I.² For the reasons set forth below, Defendants' Motion for Summary Judgment on all Counts is GRANTED, and Plaintiffs' Cross Motion for Summary Judgment on Count I and Motion for Class Certification are DENIED.

I. BACKGROUND

Defendant MacLean-Stevens Studios, Inc., is a New Hampshire corporation which offers student portrait services and products throughout Maine. Plaintiffs are parents of school-aged children who purchased portraits from Defendants according to a "commission price list," which sets forth prices charged to parents whose children attend schools which have entered into a particular contract with Defendants. This contract provides that the school will receive a commission of 20% of the price of the portrait packages sold in the school and designates Defendants as the exclusive providers of portraits on school property.³ Prices on the commission price list are generally 20% higher than portrait prices charged to parents whose children attend schools which have not entered into such an agreement with Defendants. The nature and quality of the products offered for purchase by the parents in the two groups of schools is identical.

The decision to accept a commission from Defendants and enter into an exclusive relationship with them is made entirely by individual schools. If a school contracts with Defendants, the resulting commission goes to the school's general fund. If the school declines to contract, Defendants' savings on the commission expense are passed on to parents in the form of lower portrait prices. Before 1996, parents were not informed that the prices on the commission price list reflected the commission paid to their children's school. At no time, however, did a school's contract with Defendants obligate parents to purchase portraits from Defendants.

Whether they accept the commission and designate Defendants as the exclusive portrait providers or not, all schools provide some services to Defendants: school personnel schedule the photo sessions, provide and arrange space for the photo sessions, distribute the portrait packages to students, and collect payment from students in the elementary grades. For their part, Defendants provide a variety of products such as yearbook, team, and identification photos to all schools free of charge.

Defendants' practice of entering into exclusive dealing contracts with schools and paying a commission is not unusual in the school portrait industry. Most contracts, including Defendants', cover one year, but others may last as long as three years. Some of Defendants' competitors have paid commissions of up to 50%. In 1995-96, Defendants had 159 accounts with schools in Maine, 112 of which designated Defendants as their exclusive photographers and received commissions, and 49 of which did not.

In addition to Defendants' studio and other studios which take portraits on school property, numerous businesses in Maine offer portrait services off school grounds, including Wal-mart and J.C. Penney. Plaintiffs Brady and Bridges are aware of these options and have purchased portraits of their children from such businesses on several occasions.

II. DISCUSSION

Citing 15 U.S.C. § 13(c), Plaintiffs contend that Defendants' payment of commissions to schools in exchange for exclusive dealing contracts constitutes "commercial bribery" of the schools which act as Plaintiffs' intermediaries. Plaintiffs also allege that the different prices charged to parents for exactly the same product lessens competition and therefore constitutes price discrimination within the meaning of 15 U.S.C. § 13(a). Finally, Plaintiffs assert that Defendants conspired with schools receiving commissions to restrain trade in violation of 15 U.S.C. § 1. Plaintiffs seek relief for themselves and all similarly situated individuals and move the Court to certify a class of all persons in Maine, New Hampshire, and Massachusetts who purchased portraits based on Defendants' commission price list. In response to Defendants' Motion for Summary Judgment on all Counts, Plaintiffs filed a Cross Motion for Summary Judgment on the commercial bribery claim.

Since the Court's disposition of the Motion and Cross Motion for Summary Judgment will impact the Plaintiffs' Motion for Class Certification, the Court first will address summary judgment.

A. Summary Judgment

Summary judgment is appropriate in the absence of a genuine issue as to any material fact and when the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). An issue is genuine for these purposes if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A material fact is one that has "the potential to affect the outcome of the suit under the applicable law." Nereida-Gonzalez v. Tirado-Delgado, 990 F.2d 701, 703 (1st Cir.1993). Facts may be drawn from "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits." Fed.R.Civ.P. 56(c). For the purposes of summary judgment the Court views the record in the light most favorable to the nonmoving party. See McCarthy v. Northwest Airlines, Inc., 56 F.3d 313, 315 (1st Cir.1995).

1. 15 U.S.C. § 13(c) — Commercial Bribery

15 U.S.C. § 13(c), also known as § 2(c) of the Robinson-Patman Act, prohibits the payment of commissions to buyers, sellers, or their agents, except for services rendered. Specifically, the statute provides:

It shall be unlawful for any person engaged in commerce, to pay or grant, or to receive or accept, anything of value as a commission, brokerage, or other compensation, or any allowance or discount in lieu thereof, except for services rendered in connection with the sale or purchase of goods, wares, or merchandise, either to the other party to such transaction or to an agent, representative, or other intermediary therein where such intermediary is acting in fact for or in behalf, or is subject to the direct or indirect control, of any party to such transaction other than the person by whom such compensation is so granted or paid.

15 U.S.C. § 13(c) (1994).

Though primarily aimed at "dummy brokerages,"⁴ Congress also contemplated that the statute might play a role in safeguarding the fiduciary relationship between a buyer or seller and an agent by regulating a party who induces an agent to act contrary to the interests of his principal. See S.Rep. No. 1502, 74th Cong., 2d Sess. 7 (1936) ("to protect those who deal in the streams of commerce against breaches of faith in its relations of trust, is to foster confidence in its processes and promote its wholesomeness and volume"). Indeed, the Supreme Court has observed in dictum that the legislative history of the Robinson-Patman Act supports the proposition that § 13(c) may "proscribe other practices such as the `bribing' of a seller's broker by the buyer." FTC v. Henry Broch & Co., 363 U.S. 166, 168-69, 80 S.Ct. 1158, 4 L.Ed.2d 1124 (1960). Since its enactment, however, only four jurisdictions have found so-called "commercial bribery" actionable under § 13(c).⁵ See Environmental Tectonics v. W.S. Kirkpatrick, Inc., 847 F.2d 1052, 1066 (3rd Cir.1988), aff'd on other grounds, 493 U.S. 400, 110 S.Ct. 701, 107 L.Ed.2d 816 (1990) (concluding "as a general matter commercial bribery is actionable under [§ 13(c)]"); Grace v. E.J. Kozin Co., 538 F.2d 170, 173 (7th Cir.1976) (finding district court correctly concluded that seller's payment of commissions to buyer's agent constituted commercial bribery); Rangen, Inc. v. Sterling Nelson & Sons, Inc., 351 F.2d 851, 857 (9th Cir.1965), cert. denied, 383 U.S. 936, 86 S.Ct. 1067, 15 L.Ed.2d 853 (1966) (upholding district court's entry of judgment for plaintiff where plaintiff's competitor bribed state official who had influence over state purchasing decisions); Fitch v. Kentucky-Tennessee Light & Power, 136 F.2d 12, 14 (6th Cir.1943) (finding commercial bribery where buyer's president accepted bribes from seller). But see Seaboard Supply Co. v. Congoleum Corp., 770 F.2d 367, 371-72 (3rd Cir.1985) (questioning whether Congress intended to include commercial bribery within ambit of § 13(c)). The First Circuit has yet to squarely address the issue.⁶ Even assuming that such a cause of action is cognizable in this Circuit, however, Plaintiffs' claim that Defendants committed commercial bribery by paying commissions to schools which acted as intermediaries of parents fails as a matter of law.⁷

As an initial matter, the Court notes that there are no genuine issues as to any facts material to Plaintiffs' claim. The parties do not dispute that Defendants paid commissions to certain...